Egypt has finalized an agreement with the International Monetary Fund at the staff level on the components of a new loan programme, and it is scheduled to be announced “very soon”, according to the Egyptian Ministry of Finance.
Finance Minister Mohamed Maait said that very fruitful bilateral discussions were held with IMF experts on the sidelines of the International Monetary Fund and the World Bank Annual Meetings in Washington, and significant progress has been made in all policies, whether financial or economic.
On the sidelines of his participation in the annual meetings, the minister added that Egypt continues to control financial conditions to preserve economic gains, through the sustainability of reducing public debt rates to GDP in the medium term.
He pointed to Egypt’s success during the last fiscal year in recording positive indicators despite the inflationary pressures and uncertainty in the global arena, and Egypt was one of the few emerging economies that achieved a primary surplus in the last fiscal year at 1.3% of GDP, a growth rate of 6.6%, an increase in tax revenues by about 19% on an annual basis, and a reduction in the budget deficit from 13% in the fiscal year 2012/2013 to 6.1% in the last fiscal year, and we are targeting 6% during the current fiscal year and 4% by fiscal year 2026/27, and a decrease in the debt ratio from 103% in June 2016 to 87.2% in June 2022
For his part, Ahmed Kochouk, Deputy Minister of Finance for Fiscal Policies and Institutional Development, explained that we are continuing to implement structural reforms to enhance the competitiveness of the Egyptian economy, and to make room more for the private sector with what Egypt possesses of a supportive and stimulating political will for the private sector, and a strong, qualified and attractive infrastructure, which opens its doors to local and foreign investments to achieve comprehensive and sustainable development; in light of working on issuing the “State Ownership Policy” document, which is a real guarantee and an effective strategy to empower the private sector, deepen its participation in economic activity, and send a message of reassurance to local and foreign investors, enhancing the confidence of international institutions in the Egyptian economy, as the government plans to exit from 79 sectors and reduce its investments in 45 other sectors.
He said: “We will continue to strengthen efforts to move towards a green economy, as we are working to attract environmentally friendly investments, such as: manufacturing electric or natural gas-powered cars, solar energy, green hydrogen, desalinating seawater, and generating energy from wind, in a way that contributes to improve Egypt’s competitiveness with the Environmental Performance Index by increasing the proportion of publicly funded green investments to 50% by 2025, stressing that we are keen to diversify sources and financing tools between issuing green bonds, samurai bonds, and panda bonds, and we also aim to issue sustainable development bonds with social dimension.
Gerry Rice, Director of Communications at the IMF, issued the following statement on Saturday: “IMF staff and the Egyptian authorities have held very productive in-person discussions on the margins of the IMF and World Bank Annual Meetings and made Significant progress on all policies including the following a continued fiscal consolidation path that will safeguard public debt sustainability and ensure a steady decline of the debt-to-GDP ratio over the medium term. Additional fiscal and related structural policies that would further expand the social safety net for the most vulnerable, improve the budget composition, and enhance fiscal transparency.
Monetary and exchange rate policies that would anchor inflation expectations, improve monetary policy transmission, improve the functioning of the foreign exchange market, and bolster Egypt’s external resilience. This would enable Egypt to gradually and sustainably rebuild foreign reserves.
The implementation of the authorities’ comprehensive structural reform agenda would enhance the competitiveness of the economy, reduce the role of the state in the economy, level the playing field for the private sector, improve the business climate, and foster transition towards a greener economy. IMF staff and the Egyptian authorities have agreed to finalize their work to reach a Staff-Level Agreement very soon.”
In a related context, Sarah Saada, Senior Economics Analyst at CI Capital, said that Egypt’s reaching an agreement on the IMF loan would enhance the future outlook of the Egyptian economy by international institutions, pointing out that the matter is positive, whether for the state or investors.
Saade told Daily News Egypt that the agreement will also solve some issues related to the sources of the currency, fill the financing gap, as well as develop a plan for the government within the framework of monetary and fiscal policy.